PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6e 
ACTION ITEM 
Date of Meeting    November 25, 2014 
DATE:    November 10, 2014 
TO:      Ted Fick, Chief Executive Officer 
FROM:   James R. Schone, Director, Aviation Business Development 
Deanna Zachrisson, Business Leader, Airport Dining and Retail 
SUBJECT:  Authorization of Prime Lease Modification  Anton Airfoods for Anthony's
Restaurant operated by HMSHost 
ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to execute an amendment to
the  lease  and  concession  agreement  with  Anton  Airfoods  (operated  by  Host
International/HMSHost) for an additional two years and three months under modified terms and
conditions. The draft lease amendment is attached, substantially as drafted (Exhibit B). 
SYNOPSIS 
In order to facilitate a smooth transition of leases and concepts in the Central Terminal between
2015 and 2017, Airport staff proposes a two-year and three month extension of the lease and
concession agreement for Anthony's Restaurant which occupies 7,000 square feet of space on
the north side of the Central Terminal and is operated under license agreement by Host
International (Host). The current lease length is 10 years from the start of operations, and under
the proposed amendment the agreement would terminate on September 30, 2017. This extended
time of operation would assure: 1) the continued availability of food service during the same
time that other nearby food locations are impacted by construction; and 2) an uninterrupted
revenue stream to the Port.  In addition, the percentage rent structure for the extension period
would be modified and result in increased revenue to the Port.  In 2013, Anthony's generated
more than $1 million in revenue. Additionally, the extension provides employment stability for
approximately 140 employees. 
BACKGROUND 
In 2000, the Port conducted a Request for Qualifications (RFQ) process in order to lease a newly
constructed space on the north side of the Central Terminal. Initially, there were three proposers
that responded to the RFQ. The opportunity was first awarded to locally owned Anthony's
Restaurants.  However, execution of the agreement, the first awardee withdrew from
consideration. The second candidate, Anton Airfoods, was chosen to operate a McCormick and
Schmick's restaurant under a license agreement. Shortly thereafter, McCormick and Schmick's
withdrew their interest in operating in airports. Anton Airfoods proposed a new arrangement for
the operation as an Anthony's Restaurant under license agreement with the locally owned 

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
November 10, 2014 
Page 2 of 5 
company.  The Port Commission approved the lease agreement in January 2003 and the
restaurant opened for business in June 2005. However, already a month before opening, Anton
Airfoods was sold in its entirety and the lease agreement was assigned to the purchaser, Host.
Since that time, Host has operated the restaurant.
The RFQ process sought an operator willing to make a significant investment in the Central
Terminal space for an initial term of 10-years. With uncertainty about the investment required,
and due to the perceived risk of a location without close proximity to gates, the Port also agreed
to two 5-year lease options at the Port's sole discretion. Anton Airfoods/Host invested $4.2
million in the initial build out of the restaurant, and another $400,000 in refurbishment in 2010. 
At the time, the initial investment was the largest investment in a single restaurant in any U.S.
airport. All of the initial proposers offered the Port 8% percentage rent on all categories of sales,
and this became the negotiated rent in the lease and concession agreement. When the lease
agreement was approved in 2003, the Port's development consultant at the time predicted that
the Anthony's location would achieve sales of between $4.2 and $4.3 million annually, and
provide the Port with approximately $340-$360,000 in annual revenue. Anthony's has been a
success far beyond expectations as it achieved sales in calendar year 2013 of more than $13.5 
million and generated more than $1 million in Port revenue. 
The current lease and concession agreement expires on June 30, 2015, and absent other action,
the lease becomes a month-to-month agreement with 30 days' notice to terminate in accordance
with the "hold over" provision in the lease. It is unlikely that Host would cease operations in the
space; however, because of the large square footage, volume of business and its revenue
importance, the Port should not risk the possibility of closure under the hold over provision. It is
also important to be assured of continued operations during a period of anticipated construction
impacts to other parts of the Central Terminal. Therefore, staff is proposing an extension of the
agreement through the summer travel season of 2017. Staff recommends this action rather than
the exercise of the existing five-year option. In accordance with the program's phasing plan, the
location would be offered in a new competitive RFP process in 2017, to re-open with a possible
new concept or operator after completed renovations in 2018. 
Currently, nearly all of the leases for the Central Terminal food service locations expire in May-
June 2015, which is 10 years after they opened. While it is not a problem to open multiple
businesses in an airport simultaneously, it is very problematic to transition their leases
simultaneously 10 years later. It is also unwise to disturb business activity during the summer
travel season, when the Port and its dining and retail businesses do 30% of their annual sales. As
a result, the phasing plan must result in some locations transitioning sooner than others and none
during peak travel periods.
The current phasing plan entails the closing of two quick serve units on the south side of the
Central Terminal in September 2015. At that time, the current grease duct venting system 
(which has previously been plagued with operational problems) will be removed from these
units, and they will be reconfigured to serve both passengers and future employees in the units
more efficiently. The closure of these units will result in a reduction in capacity until they re-

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
November 10, 2014 
Page 3 of 5 
open.  Upon the completion of those renovations, the remaining quick serve units will be
impacted by removal and replacement of the rest of the grease duct venting system as well as by
space reconfiguration. The Airport plans to have full capacity of the south side of the Central
Terminal restored before the summer of 2017. During the time of the closure impacts, it is
important to retain other food service wherever possible. The continued operation of Anthony's
is not only possible; it is a preferred option and a logical solution to food service capacity issues. 
Anthony's is a one-of-a-kind restaurant in the Airport. It is the only restaurant that provides
customers with porcelain tableware, stainless cutlery (including a TSA-approved knife) and cloth
napkins. It offers also a full menu reflective of the menus offered at the local street-side
counterparts (Anthony's and Chinook's).  Staff understands that the costs to operate Anthony's
to the quality standards customers expect are very high. Nonetheless, staff believes that a
competitive tender of the restaurant location is likely to generate higher percentage rent offers in
the future. For this reason, staff believes that it is in the best interest of the Port to not execute
one of the available five-year options, but rather undertake a new competitive process in 2017
when the Airport will be better situated operationally and with sufficient food service capacity to
transition the restaurant. Even if the incumbent operator were to retain the restaurant space, the
Airport can expect that the restaurant will close for some period of time for renovations in late
2017. 
REQUEST JUSTIFICATION AND DETAILS 
Approval of this lease amendment will allow the Port to sustain adequate food service in the
Central Terminal during periods of construction activity. A new competitive process for the
restaurant in 2017 will assure that the Port garners the highest possible rent for the 10-year
period following. The restaurant operation will sustain approximately 140 management and nonmanagement
jobs. 
FINANCIAL IMPLICATIONS 
As part of the negotiations with Host for this proposed term extension, the company has agreed
to a modified rent structure, pending and contingent upon approval by the Host Board of
Directors. Currently, as stated above, Host pays 8% of all gross sales in rent to the Port.  The
new proposed rent structure would be as follows: 
Tier                   Percentage 
0 - $5 million            8% 
$5,000,001 - $10 million    10% 
Sales over $10,000,001     12% 
To place this rent into context, below is the actual rent that Host paid to the Port in the 2013-
2014 lease year (July-June), and the rent Host would have paid the Port according to the current
proposal. The lease year for Anthony's under the extended term would begin on July 1, 2015
and the new rent structure would commence on that date.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
November 10, 2014 
Page 4 of 5 

Rent Comparison  Anthony's Restaurant 
2013-2014 Actual Rent                    $1,074,095 
2013-2014 Illustrative Rent (under new structure)    $1,311,142 
The proposed new rent structure will increase Port revenues for the term of the extension through
September 2017. 
STRATEGIES AND OBJECTIVES: 
This project support the Port's Century Agenda goal to "advance the region as a leading tourism
and business gateway" by providing an extraordinary customer experience at the Airport. The
project also supports the Aviation Division's strategic goals to operate a world-class airport and
grow non-aeronautical revenues. 
TRIPLE BOTTOM LINE 
The Airport Dining and Retail program places a high value on the concurrent pursuit of positive
economic, community, customer service and environmental outcomes in management of the
program. The proposed extended lease term for Anthony's is clearly consistent with these
values. 
Economic Development 
The extension of the Anthony's operation will lead to increased revenues over those generated
today. The amended lease and concession agreement will generate approximately an additional
$600,000 in Port revenues. In addition, the Anthony's operation supports approximately 140
full-time jobs with Host (see also below). 
Environmental Responsibility 
Airport restaurant locations are built to the strictest of Port standards for environmental
sustainability with includes durable materials that can withstand high traffic volumes without the
need for frequent replacement. 
Community Benefits 
This proposal supports the continuity of approximately 140 employees with Host.  The
employees are represented by the Hotel Employees Restaurant Employees union (UniteHERE!)
Local 8. Anthony's employee wages are included in a separate wage scale and are generally
higher than other Host employees. Starting wages in 2015 will range from $9.44 for tipped
servers to $14.94 for a Cook I.  The collective bargaining agreement contains annual raises
between 5 and 13 cents depending upon type of job classification (non-tipped, tipped and
bartender). In addition, employees have access to family health care benefits at a very minimal
cost to the employee ($40 or $50 a month depending on tenure). Host contributes $5.09 per hour

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
November 10, 2014 
Page 5 of 5 
for each employee to union benefit plans. Host pays an additional 62 cents per hour for pension
for each employee. As of January 2015, the lowest wage and benefit rate paid to any Host
employee is $15.15 (server category, not including tips). These jobs meet all of the criteria for
quality jobs as recently articulated by the Commission. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Allow the lease to move into hold over status while an RFP process is
conducted. Issuance of an RFP for the Anthony's location has been unrealistic during 2014, due
to the uncertainty associated with the public discourse on minimum wages in SeaTac, Seattle and
at the Airport. If the Port issues an RFP in early 2015, the process would not be complete in time
for the expiration of the lease in June 2015. The lease would automatically move into hold over
status. While it is unlikely that Host would cease to operate the restaurant with 30 days' notice,
the Port and the traveling public are particularly vulnerable to business disruption due to the size
and business volume of this particular restaurant. This is not the recommended alternative. 
Alternative 2)  Execute one existing 5-year lease option. If the Port were to execute one of the
existing five-year options, the lease would expire on June 30, 2020.  This is beyond the
necessary time needed to address the infrastructure issues of the opposite side of the Central
Terminal. It also would delay the opportunity for the Port to determine if the marketplace might
offer another type of concept and/or a more lucrative rent offer.  This is not the recommended
alternative. 
Alternative 3)  Extend the current lease agreement through September 2017. This alternative
will allow for continued operation of key restaurant capacity while there are construction impacts
to food service in other portions of the Central Terminal. An extension also provides stability in
employment at the restaurant for current employees. This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
Exhibit A: PowerPoint Presentation 
Exhibit B: Draft Lease Amendment 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
January 28, 2003  Approval of Lease and Concession Agreement with Anton Airfoods
to operate an Anthony's Restaurant in the Central Terminal.